These three stocks are a nice addition to the defensive investor/income investor's portfolio, and are a good starting point if you are thinking about shifting around the contents of your current portfolio.
American Capital Agency Corporation (NASDAQ:AGNC): Ben Bernanke's disclosure that the Fed Funds rate is going to stay at basically zero until at least 2013 is a massive development for REIT investors. AGNC is negatively effected by unusually low interest rates (as shown by the 2.13% yield on the 10 year note) as well as increases in pre-payment risk. Treasury yields are nearing record lows however, and probably don't have that much more downside. AGNC is currently yielding 19.7%, which should stay very stagnant over the next couple of years. While you most likely won't see particular share price gains, the company has done a great job over the last couple of years and may return even more than expected. This is obviously not a long term buy as any hint of interest rate hikes will begin to eat away at the company, but investors should be happy to receive the near 20% dividend over the next year or two. Share prices don't really move all that much so further economic weakness won't kill this, and the dividend makes it more than worthwhile to hold.
Pfeizer (NYSE:PFE): As a pharmaceutical company, it can be classified as a relatively defensive stock. With its beta of .71, it would be unlikely to follow the market's downward path with a strong correlation in the event of another recession. Because of recent selling, PFE now maintains a 4.8% dividend, which will help conservative investors out by providing some income in the event of a down-trodden market. Pfeizer also has a diverse pipeline with plenty of profitable drugs already on the market. They do however face several patent endings.
Philip Morris (NYSE:PM): Philip Morris strictly does business internationally, and in several high growth markets. This allows you to stay globally diversified, and markets in the Middle-East and Asia were not affected as much as developed countries were during the last recession. Most of the markets that PM operates in may even continue to grow in the midst of a global slowdown, especially considering that the product they sell is not terribly correlated to the economic changes because of its addictive nature. The current dividend of 3.95% is good enough to provide income to investors, and you may get an opportunity to lock in the dividend at an even higher rate if this selling continues in the short term. The company has a history of providing steady earnings and dividends, making this a very defensive investment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.